IT transformation fuels enterprise network revenue growth

The analyst firm says the growth is due to enterprise customers increasingly modernising their networks to reduce infrastructure costs and complexity and boost business agility. These needs are also leading to increased adoption of white-box hardware and demand for network security, TBR says.

However, TBR estimates total network infrastructure revenue for benchmarked vendors increased just 0.2% year-to-year, as customers are increasingly finding value in software and services, such as managed and professional services, at the expense of hardware.

According to the benchmark, Cisco remains the revenue leader in the network infrastructure space; however, Macomber says customer demand for increased network flexibility is encouraging adoption of white-box hardware, threatening hardware vendors’ sales and profitability.

Huawei, the revenue growth leader in the network infrastructure space, is investing in decoupling software from hardware, allowing for separate sales of software and hardware, and addressing customer demand for openness, without sacrificing revenue streams, which TBR believes positions Huawei strongly in the infrastructure segment.

TBR’s research also reveals average network security revenue growth for benchmarked vendors was notable in 2H15, increasing from a 5.3% year-to-year decline in 2H14 to growth of 6.6% year-to-year in 2H15.

“Although North America is the clear front-runner, for long-term investments we see vendors looking toward emerging markets, such as CALA, where foundations being established now will drive steady growth in the coming years,” she says.